Mumbai, April 22
The BSE Sensex rose for a second straight day on Monday to its highest close in a month led by gains in rate-sensitive stocks such as HDFC Bank, pricing in at least a 25 basis point rate cut in the upcoming policy on May 3.

The Reserve Bank of India is likely to cut interest rates next week for a third time this year, according to a Reuters poll (see below).

Analysts also expect the RBI to sound more optimistic than its March policy as a slump in gold and crude prices is seen helping narrow the current account deficit.

"We expect 50 basis points rate cuts in the remainder of this year with 25 bps expected in the upcoming policy," said Pankaj Pandey, head of research at brokerage ICICI Direct. Larger rate cuts would depend on what happens on the inflation front, he added.

The BSE Sensex rose 0.81 %, or 153.37 points, to end at 19,169.83, marking its highest close since March 18.

The NSE Nifty rose 0.89%, or 51.30 points, to end at 5,834.40, closing above the psychologically important 5,800 level.

Expectations that lenders' January-March earnings would beat estimates, and a gain in European stock markets on a possible resolution to Italy's long-running political crisis, also helped Indian stocks.

Rate sensitive stocks such as HDFC Bank rose ahead of quarterly results later in the week, aided also by hopes of a rate cut by the RBI.

HDFC Bank rose 3.7% and ICICI Bank gained 2.3%.

Tata Motors gained 1% after unit Jaguar Land Rover Ltd's China chief said it aims to increase its sales by 20-30 percent this year in China, its biggest market.

Shares in Maruti Suzuki rose 1% on hopes a weaker yen would help improve margins by reducing the costs of importing auto parts from Japan. Titan Industries rose 5.5% after gold jumped more than 2% on Monday after a rebound above $1,400 ignited technical buying.

Reliance Communications shares rose 13.5%, to mark their highest close since March 14, after the company said Saturday that Samena Capital, along with certain other PE funds, is doing due diligence in relation to the acquisition of unit Reliance Globalcom Ltd.

However, among stocks that fell, the Wipro stock was down 8% after it gave a weaker-than-expected quarterly sales forecast on Friday. — Reuters

New Delhi, April 22
Global furniture major IKEA will be allowed to run cafes and restaurant within its single brand stores in India but not sell food items, Parliament was informed on Monday.

The company had sought permission for single brand retail trading of 'IKEA' products including setting up of IKEA restaurants and cafés and IKEA Swedish food market (to sell only single brand IKEA products), Commerce and Industry Minister Anand Sharma said in a written reply to the Lok Sabha.

"The proposal has been recommended by FIPB to the extent that IKEA can have a restaurant/café in accordance with their global model but cannot engage in retailing of food items.

"Accordingly, the following condition has been proposed: Food and beverages to be sold within IKEA restaurant/café located in the IKEA retail store. No food items shall be retailed off the shelf in any other part of the retail store," he said.

Though the world's largest furniture maker had received the approval of Foreign Investment Promotion Board (FIPB) for its Rs 10,500 crore proposal, Cabinet Committee on Economic Affairs has yet to approve it.

The FIPB can clear investment proposals worth up to Rs 1,200 crore.

Sharma also said that some foreign companies had requested for permission to sell food items as part of their proposal on FDI in single brand retail trading.

"Marks & Spencer sought approval to sell Marks & Spencer branded long life processed foods such as chocolates, confectionery etc. The proposal was rejected on 9th January 2009 as retailing of food items is not permitted in the policy on FDI in single brand retail," he added.

The FIPB has approved the world's largest furniture maker IKEA's proposal to invest Rs10,500 crore in single brand retail business in India. The proposal is yet to be approved by the cabinet. Overseas investment proposals worth above Rs.1,200 crore have to be approved by the cabinet. — PTI/IANS

New Delhi, April 22
The Reserve Bank of India is likely to cut interest rates next week for a third time this year, drawing comfort from a fall in inflation as it seeks to help lift the economy from its lowest growth in a decade, according to a Reuters poll.

Thirty-seven of 42 analysts polled last week expect RBI to cut the repo rate by 25 basis points to a two-year low of 7.25% when it holds its policy review on May 3.

"They really want to provide support to economic activity," said Tuuli McCully, senior economist at Scotiabank.

The RBI is also likely to leave the cash reserve ratio (CRR) unchanged at 4% on May 3, according to 26 of 38 economists. The CRR is at its lowest level since 1976.

The RBI has cut its benchmark rate by 25 basis points twice this year, having earlier resisted calls from industry and the government to ease monetary policy for much of 2012.

The latest poll's finding are in line with one taken in March.

Headline inflation dropped to its lowest in more than three years during March, at 5.96%, while economic growth languished at around 5% in fiscal year 2012/13.

McCully said a key factor in the RBI's likely decision to cut rates will be the favorable trend in wholesale prices.

But, while the moderation in wholesale price inflation is supportive for a rate cut, the scope for cuts remains limited.

In its March review the RBI had warned that room for monetary easing was "quite limited" due to concerns over a widening current account deficit and a growing gap between retail and wholesale price inflation.

"I expect the RBI to sound a little more optimistic than it was in the March policy, but it will still hold its cautious guidance on the pace of rate cuts given that consumer price inflation is much higher than wholesale price index," said Sanjay Mathur, head of economic research for non-Japan Asia at Royal Bank of Scotland.

While consumer prices rose 10.39% in March, marginally easing from 10.91% in the previous month, current account gap hit an all-time high of 6.7% of GDP in the December quarter.

However, recent falls in commodity markets, which have seen gold prices tumble and crude oil prices slide to around $100 a barrel, are expected to ease strains on the current account deficit. India is one of the largest importers of both commodities.

The latest poll also showed most analysts expect the RBI to cut rates at least once more after May and bring the easing cycle to an end.

Of 37 respondents, 13 expect the repo rate to have fallen to 7% by the end of September, while a further seven saw it being lowered to 6.75% then.

A separate quarterly poll earlier this month showed economists cut their growth forecast for Asia's third largest economy for the eighth consecutive time, projecting GDP at 6% in 2013/14, lower than 6.4% seen in a poll in January. — Reuters

Kolkata, April 22
Japanese auto maker Honda, which has recently entered India's diesel vehicle segment with the launch of the entry-level sedan Amaze, said Monday it would continue to bring diesel versions of the cars along with petrol which would be rolled out in the next two-three years in the country.

"We bring in the sedan for the dieselization of the market. We have to go along with the market. And all the models to be launched in the next two-three years will have petrol as well as diesel variants," Honda Siel Cars India senior VP Jnaneswar Sen told reporters here.

The auto major has launched the model in both petrol and diesel variants. It will compete directly with market leader Maruti's best selling sedan Swift Dzire, along with Tata Indigo and Toyota Etios.

Honda will roll out four more new models, including a new generation Jazz, a compact SUV and a 7-seater multipurpose vehicle in the next three years. The company will launch the new Jazz in 2014.

On the launch of the new SUV and MPV, Sen said the company was yet to decide when the two models would be rolled out in the country.

"The compact SUV will be on Jazz platform and the 7-seater MPV will be on the current brio platform. We are looking into these two models very closely," he said.

He said the firm's entry into the diesel vehicle segment would give more choice to customers. Despite a reduction in the gap between petrol and diesel prices in India, demands for diesel version cars would still exist, he added. — IANS

New Delhi, April 22
Looking to attract foreign investments in electronics system design and manufacturing, Communications & IT Minister Kapil Sibal met ambassadors and heads of chambers of commerce of major electronics producing countries on Monday.

Representatives from the United States, Japan, Germany, Korea, Taiwan, Britain, Belgium, Finland, Sweden, Israel and other countries met Sibal, who also shared the new policy initiatives launched by the government to promote the sector.

"There have been positive responses from all the representatives and they all want to invest in India, which will also generate many jobs to our people," Sibal told reporters after the meeting.

“The government has got Rs 2,000 crore proposals in electronic manufacturing sector and it has cleared around Rs 1,000 crore for setting up of manufacturing hubs”, he said.

The meeting was informed that the sector has the potential to attract investment of nearly US $100 billion over the next decade or so.

Government permits 100 per cent FDI through the automatic route for electronics manufacturing. It is with this objective that the Cabinet has approved the 2012 national electronics policy.

Sibal invited these countries to send trade delegations in the electronics sector so that they can get familiar with the new opportunities in the sector and to participate in leading industrial events in the country.

Mumbai, April 22
Japanese brokerage firm Nomura on Monday said the recent fall in gold and oil prices can help improve India's elevated current account deficit (CAD) by one percentage point to 4.3 per cent during 2013. "If commodity prices are sustained at today's lower levels, the current account deficit may improve by around 1% of GDP to 4.3% in 2013, (down) from our base case of 5.3%," it said in a note.

It, however, added that the CAD will still be high and "financing it will continue to remain a concern".

It can be noted that CAD has hit a historic high of 6.7% in the December quarter of fiscal 2012-13, leaving everyone worried and the full fiscal is going to end with a CAD of over 5%, making it a major worry for the policymakers.

There has been a large correction in the gold and oil prices over the last fortnight, which has ushered in optimism on the macroeconomic front for the country.

"This will likely to lower WPI inflation, help moderate the current account deficit and help reduce the government's fuel and fertilizer subsidy bill — providing some much-needed breathing space to policymakers," the Nomura note said, adding India is among the "biggest winners" because of the correction.

It said the gold import bill go down by US $8 billion because of the price effect and there will also be an additional benefit because of the decline in volumes as it looses lustre as an investment item.

Similarly, it said a fall of $10 per barrel of crude oil will help lower the net import oil bill by $9 billion.

On the inflation front, it said lower commodity prices and a stable currency will ease input cost pressures and bring down wholesale price inflation sharply. "We estimate CPI inflation to be only 0.60% lower than our baseline assumption at 9.2% year-on-year in 2013. WPI inflation should fall sharply to 5.6% y-o-y in 2013, 1.60% below our current forecast, due to the higher weight given to commodities in the WPI basket," it said. — PTI

New Delhi, April 22
Cellular connections in the country are expected to grow to 770 million in 2013, an 11% jump from 712 million connections in 2012 as India's mobile services market may reach Rs 1.2 lakh crore in 2013, up 8% from 2012 revenues of Rs 1.1 lakh crore.

“The mobile market in India will continue to face challenges if average revenue per unit (ARPU) does not grow significantly,” said Shalini Verma, principal research analyst at Gartner. “If the prevailing conditions do not change in the Indian telecom market, India will account for 12% worldwide mobile connections, but just 2% of worldwide mobile services revenue (in constant US dollars) in 2013.”

According to research firm Gartner, Indian telecom operators are faced with two major challenges - growing their profit margin in the face of intense competition and successfully competing with over the top service providers, such as Facebook and WhatsApp.

“As mobile voice services continue to get commoditized in the country with the increased use of voice over IP (VoIP) and the probable termination of national roaming charges, mobile broadband is the area of opportunity for operators,” said Verma.